Global Economy and Crypto Market. What, How, and Where?

When a cryptocurrency experiences some pumps in the times of a contracting economy, let's not forget, a large amount of the capital is departing the market. The smaller investors are tempted to purchase the crypto assets. They are becoming very vulnerable to exposure to a loss. These changes are taking place in the last 5 months showing a downtrend in the economy, and the trend only continues to strengthen. It is just a matter of time before retail investors will encounter the maximum amount of pain.

Two weeks ago, the Chair of FRS held a press conference, that made a huge impact on the markets worldwide. It was the most aggressive attitude by the Fed officials toward the containment of Inflation. Jerome Powell stated that the FRS will not stop until inflation is on a tight leash. It will have a very damaging effect on the global economy. It is going to get worse before it gets better.

Let’s take a look at the key macro factors:

The interest rate rose sharply and there is no easing on the horizon. Big UK pension funds are on the brink of default. A natural gas pipeline is being blown up. Protests in Iran and around the world. Unexpected leadership came to power in Italy. Russia is moving to annex the territories it invaded in Ukraine.

All these factors keep investors anxious and on the edge of giving up. Especially retail investors.

Looking at the stock market, especially the giants such as Apple is down almost 10% in a week. Tesla will be next. Most of the retail investors were buying the “Blue Chip Stocks” in 2020-2021 when COVID-19 was in full swing. According to some market research, when these stock will start crashing down, it is a sign of the market capitulation stage. It is just a matter of time.

The tension is rising. It feels like the market is expecting some real life-altering event, which nobody prepared for. It might be a new large-scale war, another deadly pandemic, or maybe a large-scale chain supply crisis never seen before. World leaders are not resorting to diplomacy, instead threatening each other with lethal force. In the US people are very divided, and politicians are not paying attention to the people’s needs, they are only enhancing the situation that is getting completely out of control. It even might lead to a civil war in the US if politicians are not going to resolve real important issues.

We are not expecting any of these horrible events. But it is a possibility. If any of these events will take place, markets are going to hit rock bottom. And the crypto market will follow the entire global financial markets. These types of events will spark a long-term global crisis with prolonged and unpredictable recovery and reshaping of the entire landscape of the global economy.

The year 2022 was really rough. As a result, markets are so fragile right now, that any shift in any segment of the economy will send it into a free fall. Any poorly thought after policy regarding the supply chain of energy, food, natural resources, or any other vital economic components. We should remember that the COVID-19 chain disruptions are not fully restored.

Let's not forget, some economic superpowers are struggling with their currencies. Euro almost even with USD, British Pound is plummeting, Japanese Yen is in need of government intervention.

We are not suggesting that the world is about to tear at the seams. But the factors and the situation is pointing in this direction.

So the question is: what should we do? How do we survive these events?

We are big believers, if there is a challenge - there is always an opportunity.

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Until the next time

AIVIA executive team